* Lower house approves LNG export law in final reading
* Law easing Gazprom export monopoly to take effect in 2014
* Next new plant to be launched by 2017
* Novatek, Rosneft are the main beneficiaries
* Russia needs to move quickly to find market - expert
By Katya Golubkova
MOSCOW, Nov 22 Russia's lower house of
parliament gave its final backing on Friday to amendments that
would end Gazprom's gas export monopoly by letting
rival companies send super-cooled gas by tanker to the
fast-growing Asian market.
Russia wants to double its share of the global trade in
liquefied natural gas (LNG) to 10 percent by 2020, benefiting
from Japan's move away from nuclear power and China's call to
curb the use of coal.
Changes to the law on gas exports, passed at a third and
final reading, would allow Russia's No.2 gas producer Novatek
and state oil giant Rosneft to finish
projects and compete with Gazprom's existing Sakhalin-2 plant.
State-owned Zarubezhneft, which has yet to develop its own
LNG strategy, would also be allowed to export LNG.
But the legislation would bar other new entrants,
effectively creating a closed shop.
Gazprom's monopoly on pipeline gas exports will also remain
unchanged, as will an effective ban on LNG exports to European
countries that already buy Russian conventional gas.
That would protect Gazprom's exports to Europe, where it
accounted for 26 percent of gas sales last year and - despite
recent declines in market share - targets a 30 percent share by
2020. Its LNG exports are a tiny fraction of pipeline flows.
"It's a limited liberalisation," said Valery Nesterov,
energy analyst at Sberbank CIB, singling out businessman Maxim
Barsky's proposed Pechora LNG project as the biggest loser.
Passage of the measure, which still requires approval by the
upper house and President Vladimir Putin's signature to take
effect in January, was needed to clinch up-front sales and
finance for projects such as Novatek's $20 billion Yamal LNG.
This project, on the gas-rich Yamal peninsula north of the
Arctic Circle, is scheduled to start production by 2017. A lack
of legal clarity has delayed a final investment decision.
The fine print of the amendments allows exports from three
types of project: those that already held LNG production
licences before this year; state companies if they produce LNG
from offshore fields; or production sharing agreements.
In debates this week, some lawmakers proposed allowing state
companies also to liquefy gas from onshore fields, or to ship
LNG for other firms that lacked a licence at the start of the
year to produce it themselves.
These proposals, which would have benefited Rosneft and
Lukoil, Russia's No.2 oil producer, were dismissed,
limiting competition in an industry where Russia already lags
behind its foreign rivals and lacks expertise.
Gazprom has faced criticism for downplaying the challenge
posed by shale gas and LNG and focusing on costly investments
into undersea pipelines such as Nord or South Stream.
After such delays, Russia now needs to hurry up as Qatar,
Australia, the United States and some African nations plan to
enter or significantly enlarge their presence on the
Asia-Pacific LNG market.
Gazprom only entered the LNG business after controversy over
Royal Dutch Shell's Sakhalin-2 project, on a Russian
Pacific island, was resolved when it became a shareholder.
The LNG plant, located 100 km from Japan's northern island
of Hokkaido, will produce 10.6 million tonnes of LNG this year,
Thomas Zengerly, production director at Sakhalin Energy
Investment Company, told a conference this week.
The plant has two processing trains and shareholders are now
discussing the construction of a third train to add up to 5
million tonnes, with talks focusing on gas supplies sources as
both Gazprom and Rosneft plan new facilities in the region.
Rosneft and ExxonMobil have agreed to build a plant
with initial capacity of 5 million tonnes, also on Sakhalin,
using a resource base Gazprom once coveted.
Production could start in 2018 - the year Gazprom plans to
commission its own LNG plant near the Pacific port of
Analysts and industry players question the high cost of new
Russian LNG projects - ranging from $13.5 billion for
Vladivostok to $20 billion for Novatek-led Yamal - and whether
they will make money if competition bears down on prices.
"Russian LNG in Pacific has a lot of advantages but ... it
is very, very late except for Sakhalin-2," Jonathan Stern,
senior research fellow at the Oxford Institute for Energy
Studies, told the Moscow conference.
"The Australian projects are further advanced, African
projects are further advanced and Russian projects will have to
move very, very quickly now if they are going to find a market."